SunEdison Inc (OTCMKTS:SUNEQ) Making Progress

SunEdison Inc (OTCMKTS:SUNEQ) is finally starting to make some progress in its restructuring efforts. Most investors have taken a wait and see approach with SunEdison. This is really why shares had pretty much flat lined at the $.05 level for most of the summer. But now there's some hope after the company struck some deals and has entered into settlement talks with the TerraForm yieldcos. Are things going to start heating up again for SUNEQ?It's been six months since SunEdison announced the biggest bankruptcy filing of 2016. In the bankruptcy filing, SunEdison listed $16.1 billion in debts. A $3.1 billion buying spree in 2014 and 2015 eventually went sour with the failure of a proposed acquisition of Vivint Solar Inc (NYSE:VSLR).Among SunEdison’s biggest creditors are TerraForm Power Inc (NASDAQ:TERP) and TerraForm Global Inc (NASDAQ:GLBL). These yieldcos are public, non-bankrupt companies that SunEdison created to buy the wind and solar projects it was developing. TerraForm Power said last month that it had made available to certain representatives and creditors of SunEdison and its debtor subsidiaries information about the Company’s claims and defenses against SunEdison and had filed its initial proof of claim in SunEdison’s Chapter 11 bankruptcy case. TerraForm said that it was making the information available to all stakeholders of the Company in order to encourage stakeholder input as to the terms of a potential settlement. TerraForm's Jack Stark said:

“We are prepared to enforce our rights and defenses in litigation if necessary, whether in bankruptcy court or elsewhere. However, we also recognize that resolving our relationship with SunEdison in the courts would be complicated and expensive. A settlement is overwhelmingly in the interests of both sides. We have met with SunEdison to start settlement discussions in the hope that we can resolve these matters on a schedule that allows the collaborative exploration of strategic alternatives for TerraForm Power in the best interests of all stockholders.”

In a press release dated October 4th, SunEdison confirmed that settlement discussions with the Yieldcos had commenced, and added that such settlement discussions relate both to alleged claims asserted by the Yieldcos against SunEdison, as well as meaningful claims that the SunEdison estate is reviewing and may assert against the Yieldcos. SunEdison CEO John Dubel said:

"Our Chapter 11 process has been long and complex and we are now at a critical stage as it relates to the Yieldcos. We take to heart Jack Stark's comments that a settlement of disputes between the Yieldcos and SunEdison is overwhelmingly in the interests of both sides, and we will proceed with our settlement discussions while at the same time moving forward with the sale process."

Last month, TerraForm Global agreed to not block the sale of SunEdison assets in Uruguay and India. TerraForm Global had made a prepayment to SunEdison for the 425 MW India portfolio of solar energy projects. By not blocking the sale, SunEdison was able to complete the transaction with a third party.The company also resolved its litigation with billionaire David Tepper and his Appaloosa Management LP, which is TerraForm Power's third-biggest shareholder. As part of the settlement, TerraForm agreed to segregate its information technology systems from SunEdison’s, appoint an additional independent director to its board, and included $3 million to cover Tepper's legal fees.SunEdison’s Class B shares in TerraForm Power give it about 84 percent of the voting rights while holding about 35 percent of the total shares outstanding. Brookfield Asset Management Inc is the biggest holder of TerraForm Power’s Class A shares, with a 12 percent stake. Last month, the Yieldcos announced they were selling assets. Bidders were given the options to make an offer for all of the assets, for SunEdison’s Class B shares in TerraForm Power, or to devise a way to be a new equity sponsor for TerraForm Power. Potential buyers were said to include Blackrock and Golden Concord Holdings Ltd, a Chinese clean-energy group. Brookfield said that it's interested in purchasing TerraForm assets, but will not participate in the auction process.It's still too early to tell what value there is if any in the common shares of SUNEQ. We've said in the past that it's like owning a lotto ticket. We saw this week how quickly things can change when shares rocketed higher by 83% in one trading day. The good news is that progress is being made. This still makes SUNEQ a gamble, but one worth holding on to. We will be updating our subscribers with the latest on SunEdison. For the latest updates, sign up below!Disclosure: We have no position in SUNEQ and have not been compensated for this article.